Neutrosophic DEMATEL approach for financial ratio performance evaluation of the NASDAQ Exchange

Abstract

The relative performance analysis and ranking of the financial ratios are highly important for optimal portfolio selection in the stock market. However, the relative performance evaluation of the financial ratios is highly complex and nonlinear. Thus, the main goal of this study is to measure the relative importance
of the financial ratios of two groups as Accounting based financial measures (AFM) and Economic value-based financial measures (EFM) through Decision Making Trial and Evaluation Laboratory (DEMATEL) method under the neutrosophic environment. In this regard, one-year data (June 2018-May 2019) has been collected from 8 industries in the IT sector. The AFM and EFM values have been evaluated for each firm through the balance sheet. The obtained values have been given to the two experts: an experienced investor in the NASDAQ exchange and a Professor in Finance. They have given their opinion in terms of linguistic terms. Then, the AFM and EFM have ranked based on the neutrosophic DEMATEL approach. Finally, the neutrosophic DEMATEL approach has compared with the fuzzy DEMATEL and classical DEMATEL approach. The empirical results assist the investor and traders in selecting among the selected stock.